Workmen Compensation

Why do I need workmen compensation policy?

Workers and employees suffer from employment-related hazards during the course of their employment. In the case of labourers, the probability of injuries or death on the work site may be high. If the workers or employees suffer any physical injury, disability or death due to their employment, the organization becomes financially responsible to compensate the worker and/or his family for the loss suffered. This compensation has also been mandated in employment-related laws and is, therefore, statutory.

A workmen’s compensation policy helps organizations to meet their legal liabilities. It covers the compensation payable to employees or workers of the organization in case of unforeseen mishaps. Here are some reasons why having a WC policy is important:

Workmen compensation importance

  • Compliance with applicable laws

Organizations in India are governed by the Factories Act, 1948 and the Workmen’s Compensation Act, 1923 which is also called the Employees Compensation Act, 1923. Both these Acts stress on employee welfare. While the Factories Act lays down rules for a safe working environment, the WC Act facilitates financial security of employees and their families in case of physical injuries, disabilities and death. 

Under the Workmen’s Compensation Act, organizations become financially liable to compensate their employees in case of injuries or deaths. The workmen’s compensation policy helps organizations deal with the implications of these Acts. The policy covers the financial liability specified under the WC Act and compensates the employees in case of any accidental injuries or death.

  • Financial stability

By taking care of the financial liability payable to employees, the workmen compensation policy provides financial stability to the employer. If the employer is held responsible for the physical injury or death of its employee, the policy would pay the stipulated compensation to the employee or his/her family. This, therefore, allows the employer to carry out its operations without the risk of any sudden financial outflows and provides financial stability.

  • Comprehensive coverage 

The workmen compensation policy covers injuries, disabilities and even death if suffered by an organization’s employees. Moreover, there are optional coverage benefits which are extended by the policy at an additional premium. The policy, therefore, provides a comprehensive scope of coverage and covers all possible sources of legal liability suffered by the organization due to employee-related accidents.

  • Beneficial for the employer and the employee

The need for workmen compensation insurance is high both for the employer and the employee. By covering the compensation payable to injured employees, the policy undertakes the employer’s liabilities. Moreover, it provides secured benefits to employees in case of contingencies. This gives them the assurance that if they suffer any untoward incident during their employment, their employer would compensate them financially even during difficult business cycles. 

  • Goodwill for the organization

By taking care of the workers, the workmen compensation policy helps companies avoid possible lawsuits and legal liabilities. Moreover, enables the company to be financially stable to discharge its liabilities without affecting its financial reserves. This helps organizations create goodwill and reputation in the industry. Workers are keen to join organizations that have a workmen compensation policy in place while the financial stability provided by the policy increases the company’s valuation.

So, all these points highlight the importance of workmen compensation. Its important to understand this and invest in a suitable policy for your organisation.

Why do I need workmen compensation policy?

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